NEW DIRECTIONAL PUT PLAYS

Mosaic - MOS - close: 41.13 change: -1.63 stop: 45.05

Why We Like It:
The potash/fertilizer/chemical stocks continue to breakdown. On Friday the group displayed volatility over concerns that potash prices might fall overseas. MOS produced a failed rally at the $45.00 level. I'm suggesting put positions now. More conservative trades may want to wait for a new decline under Friday's low of $39.64 to open position. This is an aggressive trade because MOS and the sector can be so volatile. Our first target is $35.50. We do not want to hold over the July 22nd (unconfirmed) earnings report.

Suggested Options:
I am suggesting the August puts.

BUY PUT AUG 40.00 MOS-TH open interest=4327 current ask $3.50
BUY PUT AUG 35.00 MOS-TG open interest=3565 current ask $1.60

Annotated Chart:

Picked on     July 11 at $ 41.13
Change since picked:      + 0.00
Earnings Date           07/22/09 (unconfirmed)
Average Daily Volume =       6.8 million  
Listed on  July 11, 2009         


NEW MARKET NEUTRAL STRANGLE PLAYS

Goldman Sachs - GS - close: 141.87 change: -1.34 stop: n/a

Why We Like It:
Goldman Sachs reports earnings this week on Tuesday after the closing bell. There is a HUGE amount of expectation for the company to knock it out of the park. Wall Street's current estimates are at $3.48 a share. Because expectations are so high I think the reaction will be bearish no matter what. However, you never know with GS as the stock can defy gravity at times. Instead of just buying a put on the earnings announcement I'm suggesting a strangle. July options expire this week so it's a chance for us to try a strangle and still keep our costs down. Of course the risk is that GS doesn't move enough and both our options expire worthless.

GS reports on Tuesday after the bell. We will open positions on Tuesday at the close. Right now the plan is to use the July $150 calls and July $130 puts but that might change based on where GS closes on Tuesday. I'll offer alternative strikes on Monday.

Suggested Options:
I'm suggesting the July options. These expire after Friday's close and we're not opening positions until Tuesday afternoon so needless to say we don't have much time, making this a higher-risk trade. We're essentially betting on a big move on Wednesday.

BUY CALL JUL 150 GPY-GJ open interest=21807 current ask $1.63
-and- (remember, prices will change by Tuesday afternoon)
BUY PUT JUL 130 GS-SF open interest=15369 current ask $1.03

Annotated Chart:

Picked on     July xx at $ xx.xx <-- Open the Position on Tuesday!
Change since picked:      + 0.00
Earnings Date           07/14/09 (confirmed)
Average Daily Volume =      10.8 million  
Listed on  July 11, 2009